Apple - A Momentum Stock Buy

Apple, Inc. (AAPL) reported strong third-quarter results on Oct 20 that were better than expected, driven by the second highest quarterly revenue in the company’s history.

Company Description

Apple, Inc. develops and manufactures personal computers and portable digital devices. The company was founded in 1976 and has a market cap of $182 billion.

Sales were up 25% from last year to $9.87 billion. Earnings also came in strong at $1.82 per share, easily outpacing the Zacks Consensus Estimate of $1.43.

The company noted that its higher sales came from the iPhone and increased Mac shipments. Apple also added that it continues to see higher market share in 3 key areas, computers, music players and smart phones. The company’s balance sheet also looks strong with cash and equivalents growing to $34 billion during the quarter.

Estimates Jump

Estimates jumped higher after the good quarter, with the current year adding 55 cents and moving to $7.60 per share. The next-year estimate is pegged at $9.39, a 24% growth projection.

Valuation

Based on the current-year estimate, this stock has a P/E multiple of 26.5X, a premium to the overall market.

The Chart

Shares of AAPL have been riding a very smooth trend higher for the last 6 months, recently gapping higher and hitting a new 52-week high on the positive earnings surprise. Take a look below.

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